CAGR calculator
Total return doesn't tell you much without the time it took. CAGR, the compound annual growth rate, is the steady yearly rate that would carry a starting value to an ending value, which lets you compare periods of different lengths.
CAGR
+12.47%
A year
- Total return
- +80%
- Growth multiple
- 1.8x
- Years to double at this rate
- 5.9
For education only, not investment advice. Results are estimates based on what you enter, and they leave out anything not shown, such as slippage and most taxes. Check the numbers with your broker or a licensed professional before acting on them.
The formula
- CAGR
- (ending value / starting value) ^ (1 / years) - 1
- Years to double
- ln(2) / ln(1 + CAGR)
Worked example
An investment grows from $10,000 to $18,000 over 5 years.
- Multiple: $18,000 / $10,000 = 1.8x
- CAGR: 1.8 ^ (1 / 5) - 1 = 12.47%
- Total return: 80%
The investment compounded at 12.47% a year, not the 16% you would get from dividing the total return by 5. At that rate money doubles about every 5.9 years.
Why not just take the average?
An ordinary average overstates returns whenever they vary. A stock that gains 50% one year and loses 50% the next averages 0%, but $100 ends at $75. CAGR over those two years is about -13.4%, which matches what really happened.
The same formula works for more than share prices. It's a common way to describe growth in revenue, earnings per share or dividends. Just make sure the start and end are comparable, for example with the same quarter's figures rather than a seasonal high against a seasonal low.
What CAGR hides
CAGR draws a smooth line through a bumpy path. Two investments with the same CAGR can have had very different drawdowns along the way, and the result depends heavily on the start and end dates chosen. A period starting at a market low looks far better than one starting at a high.
For stocks, use adjusted prices or add dividends to the ending value if you want total return. CAGR also assumes one starting amount. If you added money along the way, use a money-weighted return instead, as your broker may show.
Frequently asked questions
What is a good CAGR for a stock?
There's no single benchmark, but broad US stock indexes have historically returned somewhere around 10% a year before inflation over long periods. That is a history and not a forecast, and individual stocks and periods vary widely.
Can CAGR be negative?
Yes. If the ending value is below the starting value, the rate is negative. Going from $100 to $50 over 3 years is about -20.6% a year.
How is CAGR different from the Rule of 72?
The Rule of 72 is a shortcut: 72 divided by the rate roughly gives the years to double. CAGR gets the rate from actual values, and this calculator gives the exact doubling time using logarithms.